US Supreme Court Civil Cases of Interest-October Term 2016

So far this October Term 2016, the U.S. Supreme Court has issued two decisions
in civil cases, both on December 6.

First, in
State Farm Fire & Casualty Co. v. United States ex rel. Rigsby, the Court considered “the proper remedy when there is a violation
of the False Claims Act (FCA) requirement that certain complaints must
be sealed for a limited time period,” as required by 31 U.S.C. §
3730(b)(2). The FCA has “qui tam enforcement provisions” that allow a private party to bring an FCA
action on behalf of the U.S. Government to recover treble damages from
any person who knowingly presents “a false or fraudulent claim for
payment or approval” to the Government. When such a party (known
as a “relator”) files a complaint, it “shall be filed
in camera, shall remain under seal for at least 60 days, and shall not
be served on the defendant until the court so orders.” In this case,
the relator’s attorney — the notorious Dickie Scruggs, who
later pled guilty to bribing two state-court judges and served six years
in federal prison — violated the seal requirement by surreptitiously
disclosing the existence of the complaint to journalists.

In a unanimous opinion, the Court rejected the defendant State Farm’s
argument that any violation of the seal requirement necessarily requires
the complaint to be dismissed with prejudice. Observing that several other
provisions of the FCA do mandate dismissal, and that the requirement is
part of an enforcement mechanism meant to encourage private enforcement
of the FCA, the Court found mandatory dismissal to be inconsistent with
the text, structure, and purpose of the statute. The Court committed the
appropriate sanction for violation of the seal requirement to the discretion
of the district courts. The Court had no hesitation in affirming the decision
of the district court in this case that dismissal was not warranted given
“the questionable conduct” of Scruggs and the concomitant
blamelessness of the relators themselves.

Second, in
Samsung Electronics Co. v. Apple Inc., the Court addressed — but did not resolve — the long-running
dispute over Samsung’s infringement of Apple’s patented design
for the iPhone. There are three design patents at issue in that dispute,
covering (1) “a black rectangular front face with rounded corners”;
(2) “a rectangular front face with rounded corners and a raised
rim”; and (3) “a grid of 16 colorful icons on a black screen.”
Those seemingly generic and (to my mind) pedestrian designs were the basis
for a jury’s award of $399 million to Apple, a figure intended to
capture “the entire profit Samsung made from its sales of the infringing
smartphones.” The statutory basis for that award was 35 U.S.C. §
289, which provides that whoever sells “any article of manufacture
to which [a patented design] has been applied shall be liable to the owner
to the extent of his total profit.”

At issue in the Supreme Court was the interpretation of the phrase “article
of manufacture.” In particular, the question was “whether,
in the case of a multi-component product, the relevant ‘article
of manufacture’ must always be the end product sold to the consumer
or whether it can also be a component of that product,” e.g., just
the screen or the case of a smartphone. “Under the former interpretation,
a patent holder will always be entitled to the infringer’s total
profit from the end product. Under the latter interpretation, a patent
holder will sometimes be entitled to the infringer’s total profit
from a component of the end product.” In a unanimous and conclusory
opinion, the Court chose the latter based on the “text,” i.e.,
that the term “ ‘[a]rticle of manufacture’ has a broad
meaning.”

The Court declined, however, to “resolve whether, for each of the
design patents at issue here, the relevant article of manufacture is the
smartphone, or a particular smartphone component.” The Court further
declined even “to set out a test for identifying the relevant article
of manufacture at the first step of the § 289 damages inquiry.”
It gave both of these tasks to the Court of Appeals for the Federal Circuit
on remand. We can thus expect the battle between and Samsung and Apple
to continue for no short time.

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